sports book investing, sports betting

Sports Book Investing? Is There a Catch?

Sports betting1)Remember kids, only gamble with money you can afford to lose, and by kids I mean folks at least twenty-one years old continues to grow in popularity ever year.  This could be due to a number of factors. With technology now, it is possible to watch a telecast of almost any game imaginable.  Additionally, with the internet becoming faster and more ubiquitous with each passing year, it has become easier and easier to bet on sports.  For example, in a ten year period starting in 1994, the amount bet on the Football Championship2)the name of the event is protected by copyright law  doubled to almost 120 million dollars3) Click here to see the chart.  Nevada, through her legislators, has the foresight to see this as a long term trend, and in turn, passed significant legislation during the 2015 legislative session to put the state in the forefront of this growing industry.

Now I will tell you a bit about Senate Bill (SB) 443 that legalizes sports book investing.

 

Sports Book Investing and the Text of SB 443

Before getting into the specifics of the bill, I think it is worth taking a look at Section 2 of the bill that states the purpose and intent of the new law:

  1. The State of Nevada leads the nation in the regulation and enforcement of race book and sports pool wagers, such that the State is uniquely positioned to expand the means for natural persons to place race book and sports pool wagers in a controlled environment.

  2. Allowing natural persons to pool money in a business entity which can then place race book and sports pool wagers with nonrestricted gaming licensees will increase wagering activity in this State.

  3. A comprehensive registration of business entities that place race book and sports pool wagers will provide greater transparency for nonrestricted gaming licensees, prevent fraud and assist law enforcement agencies in this State.

 

The issue with offshore sports betting4)that is most of the betting people do now on the internet, which is illegal by the way is that you have no assurances that the offshore entity will pay you 5)just because they show a credit in your online account does not mean they will send you a check, and there is no telling who is profiting off of the VIG 6)the amount 10% or so that the book collects on each bet, for example when you bet most any sport on an even line, the odds are -110, meaning you have to bet $11 dollars to make $10.  That extra dollar is the VIG.  The advantage of legalized wagering in Nevada (besides the 100,000+ of jobs the casino industry supports) is that the companies have to file disclosures with the SEC, and the casinos are regulated sufficiently to guarantee that you will be paid on a winning sports (or other) bets.  Betting through a bookie or offshore is completely unregulated and provides no American jobs.  The legislature is admirable for attempting to take some of the illegal sports betting market share and have the money invested in our economy.

 

What the New Sports Book Investing Law Permits

Section 3 of SB 443 allows a “business entity,” once registered with the Gaming Control Board and after payment of the $1,000 registration fee7)with $500 due each of the following years to place wagers on sporting events.  Once registered with the Secretary of State, the business entity will operate in a similar manner to a mutual fund, where folks can invest with a company they believe in, and these companies will make the best wagers they can8)similar to hedge fund investing, except there are no dark pools or flash trading.  The books will still have the option to accept only the bets they want to accept.  I imagine, similar to investment funds, people will evaluate past performance and pick the fund that will make them the most amount of money.9)this may be a faulty assumption

We will have to wait and see if the larger casinos will be risk averse toward these funds, but my hunch is, given the competition for gaming dollars, they will eventually be pushed into raising their wagering caps.

 

Footnotes   [ + ]

1. Remember kids, only gamble with money you can afford to lose, and by kids I mean folks at least twenty-one years old
2. the name of the event is protected by copyright law
3.  Click here to see the chart
4. that is most of the betting people do now on the internet, which is illegal by the way
5. just because they show a credit in your online account does not mean they will send you a check
6. the amount 10% or so that the book collects on each bet, for example when you bet most any sport on an even line, the odds are -110, meaning you have to bet $11 dollars to make $10.  That extra dollar is the VIG
7. with $500 due each of the following years
8. similar to hedge fund investing, except there are no dark pools or flash trading
9. this may be a faulty assumption
civil forfeiture, nevada, police, 4th amendment

Civil Forfeiture in Nevada: What You Need to Know

Recently in the news here in Nevada was the acquittal of Steven Ficano; you may be familiar with his story as he is the elderly man arrested for possessing much more marijuana than legally permissible under the medical marijuana laws.  He was charged with possession, and possession with intent to sell; Mr. Ficano was acquitted by a jury from each charge.  However, along with marijuana, the police seized $51,000 in cash and twenty-six guns, which Mr. Ficano’s lawyer claims are antiques.

Given that Mr. Ficano was acquitted, it would be reasonable to assume that the government would return his cash and antique guns, but you may be surprised to know that this may not necessarily happen.1)for another example of what is called civil forfeiture in the news, look at this story of Tan Nguyen from Humboldt County, the sheriff’s deputies really turned public opinion against themselves by posing with the seized cash on facebook The Tan Nguyen case  As it turns out, there is not law in Nevada that determines what should happen to seized property if property owner is acquitted, at least not yet.

 

The civil forfeiture law currently

The Nevada forfeiture laws are located in chapter 179 of the Nevada Revised Statutes (NRS).   First, here is the law permitting law enforcement officials to seize property:

 

    NRS 179.1165  Seizure of property: Requirement of process.

      1.  Except as provided in subsection 2, property that is subject to forfeiture may only be seized by a law enforcement agency upon process issued by a magistrate having jurisdiction over the property.

      2.  A seizure of property may be made by a law enforcement agency without process if:

      (a) The seizure is incident to:

             (1) An arrest;

             (2) A search pursuant to a search warrant; or

             (3) An inspection pursuant to a warrant for an administrative inspection;

      (b) The property is the subject of a final judgment in a proceeding for forfeiture;

      (c) The law enforcement agency has probable cause to believe that the property is directly or indirectly dangerous to health or safety; or

      (d) The law enforcement agency has probable cause to believe that the property is subject to forfeiture.

      (Added to NRS by 1985, 1466; A 1987, 1382)

 

As you can see, all that is necessary is “probable cause” that the property will be “subject to forfeiture” or that the property is “directly or indirectly dangerous to health or safety.”  As in the case of Tan Nguyen, sufficient probable cause can be an officer claiming the smell of marijuana in the car 2)irrespective if there actually is any marijuana or marijuana smell in the car.

  

Is the civil forfeiture law about to be updated?

Senate Bill (SB) 138, currently working its way through the legislative process3)It has been unanimously approved by the assembly and the senate, it is currently awaiting a signature from Governor Sandoval.  In SB 138, the legislature requires police departments to report all forfeitures to the attorney general once a year, so we will now have an accounting of how much property is being seized each year.  Additionally, SB 138 addresses what should happen to seized property upon an acquittal.  Here is the current law:

      NRS 179.1173  Proceedings for forfeiture: Priority over other civil matters; motion to stay; standard of proof; conviction of claimant not required; confidentiality of informants; return of property to claimant.

      1.  The district court shall proceed as soon as practicable to a trial and determination of the matter. A proceeding for forfeiture is entitled to priority over other civil actions which are not otherwise entitled to priority.

      2.  At a proceeding for forfeiture, the plaintiff or claimant may file a motion for an order staying the proceeding and the court shall grant that motion if a criminal action which is the basis of the proceeding is pending trial. The court shall, upon a motion made by the plaintiff, lift the stay upon a satisfactory showing that the claimant is a fugitive.

      3.  The plaintiff in a proceeding for forfeiture must establish proof by clear and convincing evidence that the property is subject to forfeiture.

 

Below is the update to NRS 179.1173 that has been approve the by the Nevada state assembly and senate.  The strikethrough portions are the sections of the old law, deleted by the new one.  The underlined portions are the additions to the statute.

      NRS 179.1173

1.  [The] Except as otherwise provided in subsection 2, the district court shall proceed as soon as practicable to a trial and determination of the matter. A proceeding for forfeiture is entitled to priority over other civil actions which are not otherwise entitled to priority.

2.  At a proceeding for forfeiture, the [plaintiff or claimant may file a motion for] court shall issue an order staying the proceeding [and the court shall grant that motion if a] that remains in effect while the criminal action which is the basis of the proceeding is pending trial. The court shall [, upon a motion made by the plaintiff,] lift the stay [upon a satisfactory showing that the claimant is a fugitive.] after the trial is completed. If the claimant is acquitted during the trial, the property of the claimant must be returned to the claimant within 7 business days after the acquittal.

3.  If property has been seized and the criminal charges against the owner of such property are denied or dismissed, all such property must be returned to the owner within 7 business days after the criminal charges are denied or dismissed.

4.  The plaintiff in a proceeding for forfeiture must establish proof by clear and convincing evidence that the property is subject to forfeiture.

 

Note in subsection 2 that law enforcement will be required to return seized property after an acquittal within seven business days.  The same is true, as stated in subsection 3, for seized property when the criminal charges are dismissed.  Providing this guidance in the statute benefits the public and police departments.  As of 29 May, the bill has been delivered to the governor.  We will have to wait and see if he signs it into law.

For more information about civil forfeiture as a national problem, see New Yorker “Taken”

Footnotes   [ + ]

1. for another example of what is called civil forfeiture in the news, look at this story of Tan Nguyen from Humboldt County, the sheriff’s deputies really turned public opinion against themselves by posing with the seized cash on facebook The Tan Nguyen case
2. irrespective if there actually is any marijuana or marijuana smell in the car
3. It has been unanimously approved by the assembly and the senate, it is currently awaiting a signature from Governor Sandoval
Crossbow arrows on the stub

The Growth of Crossbow Use (and Injuries)

The use of crossbows for target practice and hunting has grown significantly in the past ten years.  This could be due to a number of factors.

First, as more and more predators have been eliminated from the North American continent, the deer population has been significantly enlarged.  In turn, state governments, as a matter of public policy, have been trying to encourage more folks to hunt.  One may surmise, however, that permitting the use of crossbows would not only reduce, but destroy the deer population.  This does not seem to be the case (although the data is limited).  In Ohio, where crossbow hunting has been legal since 1976, there has been concurrent growth in both the number of hunters, and the deer population.

 

The Most Comprehensive Crossbow Data Available

The state of Michigan has the most comprehensive statistics on crossbow use.  Michigan first legalized crossbow hunting in 2008, then commissioned a study to see the effect on hunters preferences through 2011.  The report, authored by Brian Frawley and Brent Rudolph1)You can read the report here: Michigan Crossbow Report, provides some interesting takeaways, especially given that they had a survey population of nearly 1,500:

  • Between 2009 and 2011, the proportion of archers using a crossbow increased from 19% to 37%.
  • Between 2009 and 2001, the number of folks hunting during archery season (this is when hunting with firearms is not permitted, but using a bow [and now crossbow] is permitted) increased by 13%.
  • Between 2009 and 2011, 25% of the hunters surveyed said that they had not hunted during previous archery seasons.
  • For the same period, 19% of the people surveyed stated that they had never hunted with anything other than a firearm before crossbow use was permitted during archery season.
  • Of the hunters surveyed, 88% said that the use of crossbows during hunting “met all or most of their expectations.”
  • Of the hunters surveyed, 96% of those surveyed said they would use a crossbow again in the future.

There is no reason to believe that the statistics from Michigan would not be applicable to hunters in the other states of the union, as Michigan hunters do not have traits that differentiate themselves from other hunters.  Correspondingly, it is reasonable to posit that if crossbow hunting continues to expand across the country, folks in other states would adopt the trends shown in Michigan.

 

The National Growth in Crossbow Hunting

Twenty-three states now permit crossbow hunting during all parts of archery season.  An additional eleven states, including Nevada, permit crossbow hunting during firearm season (the part of hunting season where guns are allowed).  An additional four states permit crossbows for at least part of the archery season.  All in all, only one state (Oregon), has a complete prohibition against crossbows.  It certainly seems the national trend is toward permitting more crossbow hunting and crossbow use.

 

But at What Cost?

The rise of crossbow use has come with a correlated rise in crossbow injuries.  After a quick internet search, one will see that these product liability cases against crossbow manufacturers are popping up in venues throughout the country: From multiple reported injuries in Texas, to Florida, to Wisconsin, crossbow hunters have suffered severe injuries to fingers and thumbs from the (alleged) manufacturing defects of the crossbows in question.   One wonders if the crossbow manufacturers have accounted for the high percentage of firearm converts to crossbows2)Note the 19% of people surveyed in the Michigan study that converted to crossbows once they were permitted to use them in archery season.

It is hard to say that the manufactures are not aware of the high conversion rate, as modern crossbows look more and more like rifles.  Hopefully, more will be done in the design stage to prevent the rash of these injuries, especially as crossbow use continues to trend upward.

Footnotes   [ + ]

1. You can read the report here: Michigan Crossbow Report
2. Note the 19% of people surveyed in the Michigan study that converted to crossbows once they were permitted to use them in archery season
cosmo-lawsuit

Cosmopolitan Fires Back in Vegas Nocturne Lawsuit

At the beginning of this year, the Cosmopolitan opened a new “social club” called Rose.Rabbit.Lie.  The venue was “a grand social experiment” that offered dinner, drinks, entertainment and a stand-alone show called Vegas Nocturne.  Vegas Nocturne was produced by the same company as the hugely-popular Absinthe at Caesar’s.   However, the show closed unexpectedly on July 13, 2014 after the Cosmopolitan sent the show’s producers, Spiegelworld, a notice of termination ending the contract between the two companies.  Spiegelworld then filed suit on August 6, 2014 against the parent company of the Cosmopolitan in Clark County District Court.

Spiegelworld’s allegations

Spiegelworld alleges that the Cosmopolitan started the relationship in bad faith and failed to properly market both the social club and the show.  Consequently, the show had lackluster ticket sales even on opening night.  In addition, Spiegelworld was required to partner with a third-party food and beverage operator.  According to the complaint, the staff for the food and beverage operator engaged in inappropriate and illegal behavior including stealing alcohol from the venue, sexual harassment, public intoxication and substance abuse.  Further, Spiegelworld alleges that the Cosmopolitan has failed to pay the severance agreements in excess of $500,000 for the performers contemplated in the agreement.  In addition, Spiegelworld claims that the Cosmopolitan has illegally retained the show’s property including costumes, props and sets to use at Rose.Rabbit.Lie.  Moreover, the Cosmopolitan has contractually restricted Spiegelworld from opening Vegas Nocturne at another venue or to use any of the entertainers for one year after the show’s closing.

Cosmo’s countersuit

At the time of the lawsuit, the Cosmopolitan stated that it would vigorously defend Spiegelworld’s allegations.   On August 28, 2014 the Cosmopolitan filed its answer and counterclaim against Spiegelworld.  In it, Cosmopolitan lays the blame for the show closing with Spiegelworld.  The Cosmopolitan states that the original concept for Rose.Rabbit.Lie was an integrated social club where all elements of the venue would work together and vary from night to night so that patrons would have different experiences each time they visited.  In order to achieve this vision, the Cosmopolitan entered into a contract with Spiegelworld.  However, Spiegelworld’s principal, Ross Mollison, saw the contract as an opportunity to create his own “O moment” whereby he would create an award winning show along the lines of Cirque’s “O”.  Consequently, he used the Cosmopolitan’s $3 million pre-production budget to create a stand-alone show named Vegas Nocturne and spent lavishly on talent, costumes and props.  According to the Cosmopolitan, Mollison refused to participate in marketing the venue, partially in an attempt to keep the stand-alone portion a secret from the Cosmopolitan. This is because the Cosmopolitan specifically did not want a show that was the same every night.  In addition, the Cosmopolitan states that Spiegelworld negotiated heavily for complete management of the venue.  Consequently, Spiegelworld was responsible for the financial losses which totaled $1 million per month.  The financial overruns allowed the Cosmopolitan to terminate the contract under the terms of the management agreement.  In addition, while some employees may have engaged in bad behavior, it was Spiegelworld’s responsibility to discipline them, not the Cosmopolitan’s.  Furthermore, the Cosmopolitan states that it has repeatedly offered Spiegelworld the opportunity to collect its personal property, which it has failed to do.  Moreover, the restrictive covenants contained in the Management Agreement were agreed to by Spiegelworld and are not overly broad. Consequently, Spiegelworld should be held to its obligations to not move Vegas Nocturne nor to recruit talent from Rose.Rabbit.Lie.  In addition, Spiegelworld should be enjoined for already recruiting former Vegas Nocturne performers in violation of the restrictive covenants.  Lastly, the Cosmopolitan denies it has any obligations to pay for severance payments as the performers were employees of Vegas Nocturne and not the Cosmopolitan.

At this point in time, it is unclear where the truth lies. However, since both parties are well-funded and able to pay for high-priced lawyers, there is no doubt that the allegations will continue to be played out in the headlines for many months to come.

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